What about it?  I actually have with me and still wear to work a jacket that I got as a hand-me-down with I was 9 or 10.

I know several kids who have winter coats 2 or 3 sizes too big for them. Winter coats are a big expense in low income households. Often they are, like DaBen said, hand-me-downs. But I know some are bought for them or donated to them purposely too big so they last for more than one season. 

No, but I'm sure was glad that I got my texas avery hat...it's a cartoon a big cowboy hat..almost looks comical but it's pretty awesome! But seriously if the jacket annoys you that much you could watch E.t. and appreciate good ol' days! It won't be everyday that the 4-5 year old kid can look like E.T. so just let them look like E.T. I never hear them complaining.

Probably so they could still use it for five winter seasons or more